Legislature(1993 - 1994)

03/03/1993 08:30 AM FSH

Audio Topic
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
txt
  HB 123:  LOANS FOR IFQ'S                                                     
                                                                               
  Number 450                                                                   
                                                                               
  REPRESENTATIVE FRAN ULMER, PRIME SPONSOR of HB 123,                          
  requested teleconference witnesses be allowed to testify                     
  first.                                                                       
                                                                               
  DREW SCALZI, REPRESENTATIVE OF THE NORTH PACIFIC FISHERIES                   
  ASSOCIATION testified from Palmer that his group endorsed HB
  123 and was very encouraged by the bill.  He admitted the                    
  IFQ (individual fishing quota) plan had been very                            
  controversial and felt it would behoove the state to                         
  research the issue before making the loan applications                       
  available when the IFQ's came up for sale.                                   
                                                                               
  PAUL SEATON, a PALMER FISHERMAN, stated HB 123 was premature                 
  as the IFQ plan was not finalized.  Additionally, the loan                   
  program might have problems because it might be                              
  unconstitutional to harvest any of the IFQ fish within                       
  natural waters of the state.  He exclaimed that the program                  
  was creating a situation where salmon harvesting would be                    
  unconstitutional within Alaskan waters.  The 1972 amendment,                 
  known as the limited entry amendment allowed for a permit                    
  restriction, limiting access to a public resource, not                       
  privatization of a public resource.  The amount of                           
  capitalization required should also be addressed, he                         
  believed.                                                                    
                                                                               
  MAKO HAGGERTY, A HOMER FISHERMAN, testified from Homer in                    
  opposition to HB 123 for several reasons.  He felt the bill                  
  was poorly researched as he had been a crewman and a                         
  skipper, and under the IFQ program, he stood to get no quota                 
  shares.  He stated that if he wanted to start a business                     
  with no quota shares and go to the state to borrow money to                  
  buy quota shares, paying $10 per share, he would never be                    
  able to pay it off.  It would take at least 20 years to pay                  
  off a $100,000 loan on 10,000 shares with interest.                          
  Although the intentions were good, he believed HB 123 made                   
  little practical sense and the numbers did not add up.  The                  
  people who will benefit are those large operations that                      
  already have initial IFQs, and those who were economically                   
  dependent on commercial fishing for their livelihood would                   
  not benefit, he added.                                                       
  CHAIRMAN MOSES assured Mr. Haggerty there were proposed                      
  amendments which would perhaps address some of his concerns.                 
                                                                               
  Number 541                                                                   
                                                                               
  CHRIS MOSS, REPRESENTATIVE OF THE NORTH PACIFIC FISHERIES                    
  ASSOCIATION, testified from Homer.  He supported HB 123 and                  
  its companion bill, SB 96 as those bills gave assets and                     
  loans to those in the industry who were least able to afford                 
  them.  He believed this would allow people with residency                    
  and experience, but with few assets, to acquire an initial                   
  allocation.                                                                  
                                                                               
  Number 550                                                                   
                                                                               
  ANNA BORLAND-IVY, A DECKHAND ON A HOMER CHARTER BOAT,                        
  testified from Homer.  She opposed HB 123 as initial IFQ                     
  owners would benefit and the smaller operations who needed                   
  the loans would not.                                                         
                                                                               
  Number 550                                                                   
                                                                               
  BILL SULLIVAN, A CREWMAN ON A HOMER FISHING BOAT, testified                  
  from Homer in opposition to HB 123.  As a crewman, he would                  
  receive no initial allocation to a quota share, and he felt                  
  Alaskans should not have to take out loans to capture fish                   
  that already belonged to Alaskans.                                           
                                                                               
  DAN FALVEY, A MEMBER OF THE ALASKA LONGLINE FISHERMEN'S                      
  ASSOCIATION, testified from Sitka.  He expressed his support                 
  for HB 123 as state involvement might help keep prices under                 
  control.  He felt the start-up limit of $5 million was not                   
  enough money.  With a new program like IfQs, he thought the                  
  turnover rate would be sufficiently high at first.                           
  Additionally, he hoped to see the IFQ program funded as well                 
  as the state's salmon limited entry permit program.  He also                 
  would like to see a second parallel loan program to provide                  
  Native groups, municipalities and the like with low interest                 
  loans.                                                                       
                                                                               
  ERIC JORDAN, A SITKA FISHERMAN, speaking from Sitka, thanked                 
  Representative Ulmer for her work on HB 123, but noted a few                 
  problems.  He said the $5 million total was not enough to                    
  start the program - perhaps $100 million would suffice.  He                  
  then said there might be problems with constitutionality and                 
  the state might need new laws to complement the federal IFQ                  
  regulations.   He also felt the state needed to invest in an                 
  Alaska IFQ acquisition program.                                              
                                                                               
  MATT DONOHOE, A SITKA RESIDENT, testified from Sitka.  He                    
  said the IFQ program was a major economic disaster for                       
  coastal communities in Alaska, and agreed the $5 million was                 
  not sufficient funding for the program.                                      
                                                                               
  TAPE 93-9, SIDE B                                                            
  Number 000                                                                   
                                                                               
  MR. DONOHOE added that before such a loan program could                      
  begin, goals for the program should be organized.  He also                   
  said there must be some way to protect the small fishermen                   
  within the program.                                                          
                                                                               
  Number 040                                                                   
                                                                               
  LINDA KOZAK, A MEMBER OF THE KODIAK LONGLINERS ASSOCIATION                   
  spoke to the committee from Kodiak.  She endorsed HB 123 as                  
  IFQs were good for the future of Alaskan fishermen, if the                   
  program was designed to benefit Alaskans, specifically.  She                 
  felt vessel owners should be able to go to a lending                         
  institution and acquire quota shares to develop markets for                  
  their product.  She opposed the section of HB 123 which                      
  provided that individuals would not be eligible for                          
  alternative sources of financing to purchase quota shares.                   
  Lastly, she noted her concern for the low amount of initial                  
  financing of the program.                                                    
                                                                               
  Number 090                                                                   
                                                                               
  KRIS NOROSE, DIRECTOR OF THE PETERSBURG VESSEL OWNERS                        
  ASSOCIATION testified from Petersburg and said she endorsed                  
  HB 123.  Now that the IFQ program has been adopted, the                      
  state should allow for the public purchase of these quotas.                  
  The current limited entry permit loan program has been a                     
  great success in allowing Alaskans to participate in the                     
  fisheries along the coast.  This was also an opportunity for                 
  non-initial IFQ receivers to enter into the program, she                     
  believed.                                                                    
                                                                               
  BILL HALL, representing the COMMERCIAL FISHING AND                           
  AGRICULTURE BANK, spoke to the committee from Anchorage.  He                 
  had been asked by Representative Ulmer to comment on a                       
  proposed letter of intent regarding SeaFad's letter of                       
  intent regarding its role in financing IFQs.  He suggested                   
  the committee look into IFQs more thoroughly, but advised                    
  that he had no objection to the letter of intent.                            
                                                                               
  CHRIS BERNS, A KODIAK RESIDENT, testified from Kodiak in                     
  opposition to the loan program because of the lack of                        
  research in the price per quota share.                                       
                                                                               
  Number 209                                                                   
                                                                               
  ERIC FORRER, A RETIRED SETNETTER FROM THE YUKON RIVER,                       
  commented on the difficulty for young fishermen to get into                  
  the business in Alaska based on hard work.  The IFQ program                  
  was important and must be put in place and supported, and                    
  halibut quotas must stay in the state, he stressed.                          
                                                                               
  Number 265                                                                   
                                                                               
  MARY MCBURNEY, EXECUTIVE DIRECTOR, CORDOVA DISTRICT                          
  FISHERMEN UNITED, testified from Cordova.  She endorsed HB
  123 and felt the IFQ was a logical program to allow people                   
  to buy into IFQ fisheries and promote local ownership.                       
                                                                               
  REPRESENTATIVE ULMER responded to some of the points raised                  
  from the testimonials.  She said the timing of the                           
  applicability of the federal regulations and the allocations                 
  were rather unclear.  If the legislature waited to see when                  
  the regulations would be in place, then Alaskan fishermen                    
  would be out of luck, she believed.                                          
                                                                               
  REPRESENTATIVE ULMER commented on the community allocations                  
  and that a program to mirror the Commercial Development                      
  Quota (CDQ) program was a good idea.  She noted some new                     
  language for CSHB 123, on page 2, line 29, that would read                   
  "are not eligible for financing to purchase quota shares                     
  from other recognized, commercial lending institutions."                     
  She believed this change should address the concerns about                   
  loan sharks from the folks in Sitka.  She also noted                         
  additional language in the proposed CSHB 123 that clarified                  
  the program was aimed at helping small fishermen the most.                   
  Lastly, she asked that the committee adopt the CS with the                   
  proposed changes on page 2, as well as the proposed letter                   
  of intent.                                                                   
                                                                               
  Number 342                                                                   
                                                                               
  GREG WINEGAR, LOAN MANAGER, JUNEAU LENDING BRANCH, ALASKA                    
  DEPARTMENT OF COMMERCE AND ECONOMIC DEVELOPMENT (DCED),                      
  noted the DCED's support for HB 123.  The overall purpose of                 
  the bill was consistent with the goals in the commercial                     
  fishing program; that being to promote a resident fishery,                   
  he noted.                                                                    
                                                                               
  REPRESENTATIVE DAVIDSON asked Mr. Winegar if he saw any                      
  problems with HB 123 or if the bill could work against                       
  Alaskan interests.  He also asked about the collection                       
  process for loans if a borrower suffered from deflated                       
  halibut prices years after taking out a loan.                                
                                                                               
  MR. WINEGAR addressed one of the concerns from the                           
  teleconference regarding debt service and if fishermen could                 
  afford to get loans through this program.  He also said the                  
  DCED looked closely at the debt service of the borrower, and                 
  historically there had been a low default rate.  He advised                  
  the committee of a soft collection program and of work with                  
  fishermen through an extension process.                                      
                                                                               
  RICHARD LAUBER, LOBBYIST FOR PACIFIC SEAFOOD PROCESSORS                      
  ASSOCIATION, offered to answer questions as he had spoken at                 
  the last meeting.                                                            
                                                                               
  REPRESENTATIVE DAVIDSON asked Mr. Lauber if he could note                    
  any problems with the program, to be analyzed in the next                    
  committee of referral.                                                       
                                                                               
  MR. LAUBER stated HB 123 was designed to stop the migration                  
  of quota shares to outside interests.  However, non-                         
  residents or residents with these shares might decide to go                  
  south with their product.  The more shares a person had, the                 
  more likely they were to go south with their product, yet                    
  the smaller operations would probably sell locally so the                    
  funds go through the local community, he said.                               
                                                                               
  MR. LAUBER continued by noting that if fish were caught off-                 
  shore and went south, Alaska collected no tax.  If caught                    
  offshore and taken to Petersburg, for example, then the                      
  state received the tax.  The state wished to encourage                       
  participation onshore for tax purposes, but also wanted                      
  participation onshore so local economies and employment did                  
  not suffer.                                                                  
                                                                               
  Number 430                                                                   
                                                                               
  REPRESENTATIVE ULMER noted she had done research about the                   
  landing issue and discovered that enforcement personnel                      
  logged landings at 16 primary ports, while other ports were                  
  spot checked by officers randomly.  Boats were supposed to                   
  radio in after a catch, at least six hours before delivery,                  
  with estimated arrival time and catch weight.  At delivery,                  
  the catch would be logged and recorded against the IFQ.                      
                                                                               
  REPRESENTATIVE ULMER pointed out any product destined for a                  
  non-Alaskan port must be checked through one of the 16                       
  primary ports in Alaska.  Shipments outside Alaska would be                  
  sealed by enforcement officers as Alaskan products and                       
  checked for regulatory compliance.  All shipments of frozen                  
  fish must be through a primary port.  Further, she noted                     
  these proposed regulations solved the problems of outside                    
  shipments.                                                                   
                                                                               
  MR. LAUBER commented that boats might be hesitant to check                   
  into one of the ports as they would be taxed for the                         
  product.  The check-in was merely an in-transit federal rule                 
  for enforcement purposes, to ensure no sale was taking                       
  place.  To tax the product might be a violation of the                       
  interstate commerce clause to pose a tax, if the boats were                  
  selling their product elsewhere.  He further noted the                       
  proposed legislation from years ago, which dealt with a                      
  landing tax for processed products and boats that actually                   
  sold their products in Alaska.  He then differentiated that                  
  the current issue was that the product would not actually be                 
  landed in Alaska, but would merely have to come to port for                  
  enforcement purposes, and then be transported elsewhere.                     
                                                                               
  REPRESENTATIVE HARLEY OLBERG MOVED to ADOPT CSHB 123, as                     
  amended, with the letter of intent and fiscal note, and MOVE                 
  from the committee with individual recommendations.                          
                                                                               
  ADJOURNMENT                                                                  
                                                                               
  CHAIRMAN MOSES asked members and the public if there were                    
  further comments.  Hearing none, he adjourned the meeting at                 
  10:00 a.m.                                                                   

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